In the past two decades the number, variety, and monetary value of marketable financial instruments, particularly securitized instruments, has grown by orders of magnitude. This is the most significant development in what many writers, for the most part Marxist, term ‘financialisation’1. It brings to light, however, an anomaly in the way they calculate the profit rate. This calculation takes no account of the capital tied up in these instruments.

This article shows that when this omission is corrected, there is a consistent long-run fall in the UK and US rate of profit which, contrary to the figures widely used by Marxists, have both fallen almost monotonically since 1968.

Why does this matter? First, the profit rate figures prominently in Marx’s own theory, as is clear from his published works. It is the explicit subject of the first 15 chapters of Capital Volume III (Marx, 1981: 117-378) and dominates the remaining analysis. Second, the results shed light on current debates about the cause of the present extended crisis. A significant group of writers (see Choonara, 2011) argue that this is recent in origin, unconnected with the serious difficulties that beset Western economies in the 1970s, and follows a recovery from that crisis, brought about by neoliberalism, in the 1980s. Thus Husson:

“After the generalized recessions of 1974-5 and 1980-82, a new phase opened in the functioning of capitalism, one which one could for convenience call neo-liberal. The beginning of the 1980s was a real turning point. A fundamental tendency towards increasing the rate of exploitation was unleashed, and that has led to a continuous rise in the rate of profit” (2008).Leer más…

Michael Heinrich is an exponent of what is known as the ‘New German Reading of Marx’, which interprets the theory of value that Marx presents in Capital as a socially specific theory of ‘impersonal social domination’. He is a collaborator on the MEGA edition of Marx and Engel’s complete works and has published several philological studies of Capital. He has also authored a work on Marx’s theory of value, The Science of Value, which is forthcoming in the Historical Materialism book series. And recently he has published An Introduction to all Three Volumes of Capital as his first full-length work to appear in English.

I am not going to do a critique of Heinrich’s views on the theory of value, as this has been done by Guglielmo Carchedi in his book, Behind the Crisis (see chapter 2). But I am moved to respond to a recent article of Heinrich’s in the American Monthly Review, entitled Crisis theory, the law of the tendency of the rate of profit to fall and Marx’s studies in the 1870s (monthlyreview.org).

In this article, Heinrich makes the following points: 1) Marx’s law is inconsistent because its categories are indeterminate; 2) it is empirically unproven and even unjustifiable on any measure of verification; 3) Engels badly edited Marx’s works to distort his view on the law in Capital Vol 3; 4) Marx himself in his later works of the 1870s began to have doubts about the law as the cause of crises and started to abandon it in favour of some theory that took into account credit, interest rates and the problem of realisation (similar to Keynesian theory); 5) Marx died before he could present these revisions of his crisis theory, so there is no coherent Marxist theory of crisis.

Abstract: This article aims to show the importance of the vampire metaphor to Marx’s work. In so doing, it challenges previous attempts to explain Marx’s use of the metaphor with reference to literary style, nineteenth-century gothic or Enlightenment rationalism. Instead, the article accepts the widespread view linking the vampire to capital, but argues that Marx’s specific use of this link can be properly understood only in the context of his critique of political economy and, in particular, the political economy of the dead.

Towards the end of Volume 1 of Capital, Marx employs one of his usual dramatic and rhetorical devices: ‘If money comes into the world with a congenital blood-stain on one cheek,’ he says, then ‘capital comes dripping from head to toe, from every pore, with blood and dirt’.2 The comment is a reminder of the extent to which the theme of blood and horror runs through the pages of Capital. According to Stanley Hyman, there are in Capital two forms of horror. The first concerns the bloody legislation against vagabondage, describing the way that agricultural peoples were driven from their homes, turned into vagabonds and then ‘whipped, branded, tortured by laws grotesquely terrible, into the discipline necessary for the wage system’. The second concerns the horrors experienced by people in the colonies, ‘the extirpation, enslavement and entombment in mines of the aboriginal population . . . the turning of Africa into a warren for the commercial hunting of black skins’.3 But to these we might add a third form of horror: the constant sucking of the blood of the Western working class by the bourgeois class. This form is nothing less than the horror of a property-owning class that appears to be vampire-like in its desire and ability to suck the life out of the working class.

Workers in the United States are in a very difficult situation—one made significantly worse by the Great Recession and the very slow “recovery.” The latest data as we write this (available for January 2013) indicates that although the unemployment rate has declined from its peak and is now at 7.9 percent, when those working part time but wanting full-time jobs and those who have given up looking for work are added in, 14.4 percent of the labor force currently needs full-time employment.1 To give some idea of the meaning of such a large percentage needing full-time jobs, this represents 22 million people, compared to total nonfarm private-sector employment of about 113 million. Given the large portion of workers in part-time positions, there are currently less than 100 million full-time-equivalent jobs left in the private sector.2 With the public sector hiring few if any workers for the foreseeable future, and no New Deal-type works program in the cards, the private sector will be the source of whatever job increases occur.

As if the current employment situation is not bad enough, there has also been a long-term decline in the relative power of the working class, with capital increasingly gaining the upper hand. One crucial indication of this is the stagnation or decline over decades of real wages (corrected for inflation). For a while workers’ lost ground with respect to wages was compensated for by more women entering the labor force so that households increasingly had two earners, helping to maintain household income. However, over the last decade there has even been a downward trend in median family income—decreasing from $54,841 in 2000 to $50,054 in 2011 (both in 2011 dollars).3 The financial impact of the Great Recession has had a devastating effect on many people—with millions declaring bankruptcy, losing homes to foreclosure, or being forced “underwater” (owing more than the worth) on their homes.

Article showing that Rosa Luxemburg’s analysis of capitalist accumulation is framed within a ‘circuitist’ macroeconomic reading of capitalism as a monetary production economy

Introduction

The aim of this chapter is to show that Rosa Luxemburg’s analysis of capitalist accumulation is framed within a ‘circuitist’ macroeconomic reading of capitalism as a monetary production economy. The strengths and limits of her approach are to be found elsewhere than suggested by usual criticisms, especially those advocated by Marxist authors. Rosa Luxemburg cannot be reduced to the uncertain theoretical status of an ‘under-consumptionist’. On the contrary, she presents a clear (although incomplete) picture of the macro-monetary and sequential working of the capitalist process.

This chapter is organized as follows. The next section examines Luxemburg’s comments on how the enlarged reproduction scheme is introduced in volume II of Marx’s Capital. The third, fourth, and fifth sections summarize, first, the orthodox attack by Bukharin, and then the more sympathetic interpretations provided by Michał Kalecki and Joan Robinson. The sixth and seventh sections emphasize the affinities and differences of Luxemburg’s circuitist perspective with the contemporary theory of the monetary circuit. The eighth section concentrates on the problem of the monetization of profits and interests. Some concluding remarks are provided in the last section.

The first century following Marx’s death (1883–1983) began under Engels’s authority, then continued under the hegemony of the Second International (Kautsky, Lenin, Rosa Luxemburg, etc.). The Leninist period of the Second International was brief, and it quickly fell under the domination of Stalinism. The second century of Marx (l983–2083) has begun with “perestroika,” with the collapse of existing socialism in Eastern Europe, and with the massive publication of hitherto unknown manuscripts. Marx in his second century will be something very different from in his first century. He will be a Marx whose critical thought will be in the hands of humanity— critical of capitalism and, in a positive way (opening its democratic and creative era), of existing socialism. We are perhaps nearer to Marx than ever. Engels himself too often confused in his “we” (Marx and I) what belonged to Marx and what Engels had added. Moreover, due to an understandable defensiveness, he could not take a clear, archaeological vision of Marx’s theoretical discoveries as we can today, thanks to the discoveries we will discuss in this article. Kautsky, Lenin, and many other subsequent Marxists had even less access to the texts with which we are now acquainted.

It is a question, then, of a complete rereading of Marx, with new eyes: as a Latin American, from the growing poverty of the peripheral world, the underdeveloped and exploited of capitalism at the end of the twentieth century. Marx is, in the periphery, today, more pertinent than in the England of the mid-nineteenth century.

I have argued in a number of papers (please see References) that there are two main stages (or levels of abstraction) in Marx’s theory in Capital. The first stage has to do with the production of surplus-value and the determination of the total surplus-value, and the second stage has to do with the distribution of surplus-value and the division of the pre-determined total surplus-value into individual parts (equal rates of profit, commercial profit, interest, and rent). The total amount of surplus-value is determined at the first stage (the production of surplus-value) and then this predetermined magnitude is presupposed in the second stage (the distribution of surplus-value). This key quantitative presupposition of the prior determination of the total surplus-value is repeated many times, in all the drafts of Capital, as I have shown in my papers. Thus, there is a clear logical progression from the determination of the magnitude of the total surplus-value in the first stage to the determination of the individual parts in the second stage. Other authors who have presented similar interpretations of the production and distribution of surplus-value and the prior determination of the total surplus-value in Marx’s theory include Paul Mattick, Roman Rosdolsky, Enrique Dussel, David Yaffe, and Duncan Foley.

Financial profit is prevalent in contemporary capitalist economies, yet its nature and sources remain unclear. In classical political economy, and for Marx, profit is conceptualised in two distinct ways. First, it is a newly produced flow of value (profit from production). Second, it is a share of either money revenue or existing sums of money, accruing through transactions in financial or real assets (profit upon alienation or expropriation). Both dimensions are vital to the analysis of financial profit, but the distinction is of particular relevance to profit from trading in financial assets, which has a dual nature. In immediate terms, profit from trading in financial assets arises from redistributing loanable money capital; when mediated, it represents the accrual of future surplus value. If, however, the mediation is incomplete, such financial profit remains redistributed loanable capital and is unrelated to newly produced value. In sum, financial profit is normally profit from production, but retains elements of profit upon alienation or expropriation.

This paper assesses the internal consistence of four views of Marx’s theory of value, the ‘traditional Marxism’ associated with Dobb, Meek and Sweezy, Sraffian interpretations of Marx, value-form theory (especially the Rubin tradition) and the ‘new interpretation’ of value theory. On the basis of a critique of these approaches, a class interpretation of this theory is outlined, in which value theory is structured in and through the primacy of class relations in capitalism. Finally, the potential relevance of the class interpretation of Marx’s value theory is briefly assessed in the light of contemporary political, economic and social problems.

The title of this paper is deliberately provocative, on at least three grounds. First, it implies that the ‘relevance’ of social theories needs to be assessed historically, and it may change as the subject of analysis is transformed over time. Second, it suggests that Marx’s theory of value may have been relevant in the past – perhaps when it was first developed, or maybe under what became known as competitive capitalism – but it may no longer be tenable in the phase of ‘global capitalism’. Third, if this is the case, what are critics of capitalism supposed to do? – is there another theory that may offer a similarly powerful denunciation of capitalism as Marx’s, with the same scientific rigour, and the same degree of commitment to the search for postcapitalist alternatives? It is impossible to address these issues in the confines of a single paper. This essay answers these questions unevenly and only partially, in three sections. The first reviews the strengths and shortcomings of different interpretations of Marx’s theory of value, the ‘traditional Marxism’ associated with Dobb, Meek and Sweezy, Sraffian interpretations of Marx, value-form theory (especially the Rubin tradition) and the ‘new interpretation’ of value theory. The second offers an interpretation of value theory based on the primacy of class relations. This interpretation is not entirely original, as it draws on an extensive literature developed over several decades.